Barrick Gold (GOLD) Last Update 3/30/22
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Barrick Gold
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Potential upside & downside to trefis price

Barrick Gold Company


  1. North American Gold Mines (Barrick Nevada, Pueblo Viejo Mine, Dominican Republic) constitute 70% of the Trefis price estimate for Barrick Gold's stock.
  2. Other Gold Mines constitute 17% of the Trefis price estimate for Barrick Gold's stock.


Gold prices declined on average from 2011-2015. This trend prompted Barrick Gold to rationalize its portfolio of mines, in response to the subdued pricing environment. Though gold prices recovered in 2016 and 2017, followed by a lot of volatility in 2018, growth in prices in 2019 was driven by increased buying from central banks across the globe. Prices increased sharply in 2020 following the outbreak of coronavirus which led to sluggish economic growth outlook.

  1. Effect of Coronavirus
    • Since the WHO announced a global health emergency due to coronavirus, stocks of major mining companies have declined. However, Barrick Gold saw a healthy rise in its stock price from $18.52/share on Jan. 31 to $24/share in December 2020. This is mainly due to the rising prices of gold. With industrial and economic activities slowing down due to the virus, prices of precious metals have increased as a safe haven. With 96% of Barrick's revenue being contributed by gold, the stock outperformed the market. The stock currently trades at a little over $20 (at the end of August 2021)
  2. Latest Annual Earnings Performance (2020)
    • Barrick Gold reported an increase of 30% in revenues, which reached $12.6 billion in FY 2020. Revenue growth was attributed to a 27% rise in price realization of gold, offset by drop in shipments. Copper revenue increased 77% due to higher shipments and better price realization. Adjusted earnings improved to $1.15 per share in FY 2020, better than $0.51 per share in the year-ago period. Improved earnings were a reflection of synergies from the Randgold merger and cost savings at Nevada due to a joint venture with Newmont Mining, along with lower tax expense.
  3. Q2 2021 Earnings Performance
    • Barrick Gold revenues decreased 5.3% y-o-y in Q2 2021 mainly due to 8% lower gold revenues. Lower gold sales and production was primarily as a result of Porgera being placed on care and maintenance on April 25, 2020, planned maintenance shutdowns at NGM's processing facilities, a mechanical mill failure at Carlin's Goldstrike roaster and mine sequencing at Carlin and Cortez. This was combined with reduced heap leach processing operations at Veladero through the first half of 2021 while the mine transitions to Phase 6.
  4. Acquisition of Randgold Resources
    • Barrick Gold acquired Randgold Resources in a $6.5 billion dollar deal which took effect on January 1, 2019. The new entity, with a combined revenue generating capacity of $10 billion dollar, owns five of the ten lowest-cost gold mines in the world. The combined entity is expected to benefit from Randgold’s superior gold grades over its rivals. Randgold’s average grade of 3.7 grams per ton over the last three years is much higher than Barrick’s average of 1.55 and the average of 1.12 grams per ton for the top five producers. This would translate into higher production at a lower cost. Also, Randgold’s disciplined management of inventory, stockpiles, and logistics has helped it to have 52 days of inventory outstanding, much lower than Barrick’s 132 days and Senior Gold Peers’ 78 days. These factors would help the combined entity in better cost management and higher cash flow generation. Benefiting from these synergies, we expect Barrick Gold's production, revenues, and profitability to increase in the near term.
  5. Gold price trend
    • Gold as an investment is often viewed as a hedge against inflation and macroeconomic and geopolitical uncertainty. Macroeconomic uncertainty caused by the unexpected outcome of the UK's June 2016 EU referendum and the uncertainty regarding North Korea’s nuclear agenda boosted gold prices in 2016 and 2017. Though prices are on a higher range in 2018, they saw some decline in the latter half of the year with rising interest rates in the U.S. However, in January 2019, gold prices again saw an uptick with major central bank of the world buying additional gold as a hedge against rising economic uncertainty. Following the bleak economic outlook with the outbreak of coronavirus, gold prices shot up in 2020. Prices have declined since the beginning of 2021 due to expectations of higher interest rates and rising bond yields, but the gold price outlook still remains positive.
  6. Divestment of non-core assets and rationalization of operating costs
    • Barrick Gold has rationalized its business in response to the subdued gold pricing environment. It has divested several high-cost gold mines over the course of the past couple of years, as well as tried to reduce its operating costs. This is reflected in the company's all-in sustaining costs (AISC) metric, which is a measure of the overall costs required to sustain a company's current mining operations. The AISC for Barrick's gold mining operations fell from $915 per ounce in 2013, to $864 per ounce, $831 per ounce and $730 per ounce in 2014, 2015 and 2016 respectively. However, the company's most recent AISC was reported at a slightly higher figure of $806 per ounce in 2018 due to a planned increase in mine site sustaining Capex. The company expects its long-term AISC to be rangebound between $870-$920 per ounce over a five-year horizon. The impact of the divestment of high-cost mines was also reflected in the company's proven and probable reserve base, which fell from 104 million ounces at the end of 2013, to 62.3 million ounces at the end of 2018.


Below are key drivers of Barrick Gold's value that present opportunities for upside or downside to the Trefis price estimate for the company's stock:

Loulo-Gounkoto and Kibali Mines from Randgold acquisition

  • Other Gold Mine Shipments: The new mines after the acquisition of Randgold Resources are included in the company's other gold mines. We expect shipments from this segment to more than double in 2019, benefiting from the new mines post acquisition, and then to rise at a modest rate to reach 1.79 million ounces by the end of our forecast period. However, if the recovery rates from the mines improve much more than expectations and the output rises at a much faster rate to reach 2 million ounces by the end of our forecast period as opposed to 1.79 million ounces currently projected, it would represent a 3% upside to our price estimate.

Loulo-Gounkoto and Kibali Mines from Randgold acquisition

  • Other Gold Mines EBITDA Margin: The acquisition of Randgold Resources is expected to help Barrick Gold achieve synergies in the form of higher grade ores, lower cost of production, better inventory management, and higher profits. Thus, we expect EBITDA margin to rise sharply in 2019 followed by modest increases to reach 44% by the end of our forecast period. However, if the synergies do not materialize as per expectations and the EBITDA margins grow at a slower pace to reach 41% by the end of the forecast period instead of 44% as projected currently, it would represent a downside of around 4% to our current price estimate.


Barrick Gold Corporation (NYSE:GOLD) is the world's largest gold mining company and is headquartered in Toronto. The firm operates primarily in four regions - North America, South America, Australia Pacific, and Africa. All four regions produce gold and produce copper in South America and Africa.

The company's total gold and copper reserves stood at 68 million ounces and 13 billion pounds, respectively, at the end of 2020. Barrick produced 4.8 million ounces of gold and 457 million pounds of copper in 2020.


Gold as the primary source of revenue

Gold mining is the most important division for Barrick Gold in terms of revenues and profits. In 2020, the company sold 4.8 million ounces of gold at an average realized price of $1,778 per ounce. It generated around $11.7 billion in revenues from the sale of gold and $0.7 billion from copper sales in 2020.


Rising demand for gold from emerging economies

Demand for gold is expected to be quite robust from major emerging economies. Rapidly growing middle-class populations and rising incomes in these countries, particularly China and India -- the world's largest gold consumers -- are expected to result in a sustained jewelry and investment demand for gold. India & China's jewelry demand increased by 12% & 3%, respectively in 2017 and investment demand from each of the country grew by 2% & 8%, respectively.

Recovery in global demand and prices for copper

The global demand outlook for copper and the prices of the metal have risen significantly in the past one year. China, the world's largest consumer of copper, has witnessed a stable GDP growth of 6.9% in 2017 from 6.7% in 2016. The Chinese government had instituted a fiscal stimulus targeting the infrastructure and manufacturing sectors to boost its economy in 2016 which has helped foster this growth and boosted the demand outlook for copper from China. Additionally, China's fight for the blue sky has increased its demand for refined copper, substituting the demand for scrap, further supporting prices. A considerably enthusiastic outlook for increased usage of Electric Vehicles (EVs) and President Trump's plans for a $1.5 trillion revamp of U.S. infrastructure has also raised the demand outlook for copper globally and thus created a favorable market environment for copper.